Calculate gross profit, margins and VAT due under the Margin Scheme or Standard VAT.
Enter the purchase and sale details below. Results update instantly as you type.
Enter the purchase and selling prices you actually pay and receive, including any VAT. Enter preparation and other costs without any VAT you can reclaim.
The purchase invoice decides the scheme, not you. Read our guide to the UK VAT Margin Scheme and VAT qualifying cars explained.
Your calculated profit, margins and VAT at a glance.
Purchase + Prep + Additional
£0.00
Selling price - all costs
£0.00
Gross profit / selling price
0.0%
Minimum selling price
£0.00
VAT is calculated as 1/6 of the margin between purchase price and selling price. Prep and additional costs cannot be deducted from the margin.
Selling price - purchase price
£0.00
1/6 of margin (£0.00)
£0.00
Gross profit - VAT due
£0.00
Extra VAT at these prices under standard VAT
£0.00
| Margin Scheme | Standard VAT | |
|---|---|---|
| VAT due to HMRC | £0.00 | £0.00 |
| Net profit after VAT | £0.00 | £0.00 |
| Customer pays | £0.00 | £0.00 |
| VAT shown on the invoice | None | £0.00 |
The VAT margin scheme allows registered used car dealers in the UK to pay VAT only on the profit margin (the difference between the purchase price and the selling price) rather than on the full selling price. VAT is calculated as 1/6 of the profit margin. This scheme applies when vehicles are purchased from private individuals, or from other margin scheme sellers where no VAT was reclaimed on the original purchase. Read our guide to the UK VAT Margin Scheme for full details, or work it out with the VAT margin scheme calculator.
The purchase invoice decides it. If you bought the car on an invoice showing VAT and reclaimed that VAT, it is a VAT qualifying car: you charge VAT on the full selling price and show it on your invoice, and you cannot use the margin scheme for it. Many ex-lease and ex-rental cars are qualifying. A VAT-registered buyer can reclaim that VAT only if they are entitled to, such as a leasing or rental company for a car, while most businesses can reclaim the VAT on a van.
Subtract all costs (purchase price, preparation, reconditioning, MOT, service and parts) from the selling price to get the gross profit. Divide the gross profit by the selling price and multiply by 100 for the margin percentage. Then deduct the VAT due under the scheme that applies to the car for the true net profit figure.
Include the purchase price, preparation and reconditioning costs (valeting, bodywork, alloy refurbishment), and mechanical costs (MOT, servicing, parts, tyres). Note that under the VAT Margin Scheme, you cannot deduct prep costs from the margin before calculating VAT. VAT is always calculated on the difference between the purchase price and the selling price only.
Stock management in Haswent tracks purchase costs, preparation spend, profit margins and VAT calculations automatically across your entire stock. It supports both Margin Scheme and Standard VAT, with branded invoicing.